The Thai baht fell sharply at the start of the 1997 Asian financial crisis.
Thailand abandoned its effort to maintain the baht's fixed exchange rate against the U.S. dollar on July 2, 1997. The currency then depreciated substantially, helping turn pressure in Thailand's financial system into a regional crisis. Thailand had accumulated heavy foreign-currency debt, and many borrowers faced rising repayment costs after the baht weakened.
Financial stress spread to Indonesia, South Korea, Malaysia, and other economies. Investors withdrew capital, stock markets dropped, and several countries required international assistance. The International Monetary Fund arranged a major support program for Thailand, accompanied by economic conditions.
The baht was not the only currency involved, and the crisis had different causes in each country. Common factors included short-term foreign borrowing, weak financial institutions, property-market excesses, and exchange-rate arrangements that proved difficult to defend. The episode is therefore often called the Asian financial crisis rather than simply Thailand's currency crisis.